Arrange a SSAS loan to your business

Are you looking for funds to help build your business, and are struggling to secure this from a bank? A SSAS loan may be the solution.

A SSAS has the ability to loan funds back to the sponsoring employer to help it develop and grow. SSAS loans can be used for various reasons, including purchasing stock or fixed assets such as machinery.

There are several points that need to be considered when loaning funds from a SSAS:

  • Loans are restricted to 50% of the net asset value of the SSAS.
  • Loans need to be secured with a first charge on assets which will need to be valued in excess of the value of the loan and interest.
  • Loans have a maximum term of 5 years.
  • Level capital repayments need to be made over the term of the loan on an arm’s length basis.
  • The interest rate needs to be at an appropriate commercial rate which benefits both the SSAS and the business.
  • It is not possible for a loan to be made for working capital or for cash flow.
  • The borrower will need to pay for all the related fees/expenses which are incurred in relation to the loan.

An example

Two directors of a business have pension schemes in existence of £100,000 each.

Director 1 pension scheme £100,000
Director 2 pension scheme £100,000
Total £200,000
Loan potential £100,000

A SSAS loan of £100,000 could therefore be made from the SSAS to the business to purchase machinery/stock etc and help it grow. The business then repays the loan with interest over time back to the SSAS, giving the SSAS and its members a good rate of return.

It is also possible to loan funds to an unconnected party subject to the points stated.

Contact us if you want to find out more about a SSAS loan

At Worcester Pensions we have extensive experience in helping clients use their SSAS to loan funds to their business. We can explain in simple terms what can and can’t be done and take you and your advisors through each step of the way to enable a smooth transaction.

If you would like to talk to us about anything SSAS, including using your SSAS loans, please call us on 01386 329840 or e-mail us.